City Antiques Inc. v. Planned Furniture Promotions Inc.

Filing 17

Opinion and Order - The Court GRANTS Defendant Planned Furniture's motion to dismiss pursuant to Rule 12(b)(3) and the first-to-file rule. Dkt. 6 . The Court DISMISSES WITHOUT PREJUDICE City Antiques' complaint. Signed on 8/12/2014 by Judge Michael H. Simon. (mja)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON

CITY ANTIQUES, INC., an Oregon
corporation d/b/a Classic Home & Antique,

Case No. 3:14-cv-00467-SI
OPINION AND ORDER

Plaintiff,
v.
PLANNED FURNITURE PROMOTIONS,
INC., a Pennsylvania corporation,
Defendant.
William D. Brandt, WILLIAM D. BRANDT PC, 880 Liberty Street N.E., Salem, OR 97301;
Robert J. Custis, ROBERT J. CUSTIS, PC, 880 Liberty Street N.E., Salem, OR 97301. Of
Attorneys for Plaintiff.
Joshua J. Stellmon, HAGLUND KELLEY LLP, 200 S.W. Market Street, Suite 1777, Portland,
OR 97201. Of Attorneys for Defendant.

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Michael H. Simon, District Judge.
Plaintiff City Antiques, Inc. (“City Antiques”) and Defendant Planned Furniture
Promotions, Inc. (“Planned Furniture”) entered into a contract governing Planned Furniture’s
assistance with a sale promotion and the liquidation of City Antiques’ inventory. The sale
promotion was not as successful as City Antiques had hoped or expected it would be. Planned
Furniture filed suit in federal court in Connecticut on March 5, 2014. Almost three weeks later,
City Antiques filed suit in this Court on March 21, 2014. Planned Furniture moves to dismiss this
action pursuant to Rule 12(b)(3) of the Federal Rules of Civil Procedure for improper venue and
pursuant to the “first-to-file” rule. For the reasons stated below, the Court grants Planned
Furniture’s motion.
STANDARDS
Rule 12(b)(3) of the Federal Rules of Civil Procedure permits a court to dismiss an action
based on improper venue. Fed. R. Civ. P. 12(b)(3). A party may assert this defense before filing
a responsive pleading. In considering such a motion, the “pleadings need not be accepted as true,
and facts outside the pleadings may be considered.” Doe 1 v. AOL LLC, 552 F.3d 1077, 1081
(9th Cir. 2009) (citing Argueta v. Banco Mexicano, S.A., 87 F.3d 320, 324 (9th Cir. 1996)).
Where there are factual conflicts, the court must resolve the disputed facts in favor of the nonmoving party, and must draw all reasonable inferences in the non-moving party’s favor. See
Murphy v. Schneider Nat’l, Inc., 362 F.3d 1133, 1138 (9th Cir. 2004).
BACKGROUND
A. The Contract Dispute
Plaintiff City Antiques owned a retail furniture store in Portland, Oregon. City Antiques
is an Oregon corporation with its principal place of business in Oregon. Defendant Planned
Furniture is a consulting company that provides promotional services to retail furniture stores
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throughout the United States, including store closing, going out of business, and liquidation
sales. Planned Furniture is a Pennsylvania corporation with its principal place of business in
Connecticut.
In May 2013, City Antiques entered into negotiations with Planned Furniture for City
Antiques to retain Planned Furniture to assist City Antiques with a “high impact promotional
sale,” in particular a “going out of business sale.” During these negotiations, City Antiques
requested projections from Planned Furniture relating to the going out of business sale. Planned
Furniture provided projections, but noted that they were “forward looking,” “subject to risks,
uncertainties, and assumptions,” and that the “actual results of the sale promotion may differ
materially and adversely from those expressed or implied.” In its projections, Planned Furniture
presented City Antiques with a draft pro forma of “Gross Sales of $2,575,000.00” that “included
a Projected Furniture Profit of 11%.” On May 31, 2013, the parties entered into the “Sale
Promotion Consulting Agreement” (the “SPCA”), which is governed by Oregon law. The parties
amended the SPCA on July 8, 2013, and added a Valuation of Company on or about July 9,
2013, both of which are incorporated into the SPCA.
City Antiques alleges that although the projected sales provided by Planned Furniture
were within a few thousand dollars of the draft pro forma, the actual costs resulted in a loss
during the going out of business sale. City Antiques further alleges that it did not receive
payments due under the SPCA and additional payments related to the sale of its inventory.
Planned Furniture contends that after signing this agreement, City Antiques took deceptive
actions and breached the SPCA, including its representations and warranties.
B. The Connecticut Action
On March 5, 2014, Planned Furniture filed suit against City Antiques in the United States
District Court for the District of Connecticut (the “Connecticut Action”). Planned Furniture
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Promotions, Inc. v. City Antiques, Inc., Case No. 3:14-cv-00279-MPS (D. Conn. 2014). In that
lawsuit, Planned Furniture alleges four claims for relief: breach of contract, fraud, unjust
enrichment, and declaratory relief. With regard to its claim for declaratory relief, Planned
Furniture based its allegation on its belief that City Antiques would make “false allegations”
against Planned Furniture, even though it was City Antiques, Planned Furniture contends, that
breached the SPCA, operated in a fraudulent manner, and caused the going out of business sale
to be a loss.
On April 11, 2014, City Antiques filed a motion to dismiss in the Connecticut Action for
lack of personal jurisdiction and a separate motion to transfer the case to another venue. On
May 2, 2014, Planned Furniture filed its opposition to both motions. The federal court in
Connecticut has not yet ruled on City Antiques’ motions.
C. The Oregon Action
On March 21, 2014, almost three weeks after Planned Furniture filed the Connecticut
Action, City Antiques filed suit in this district (the “Oregon Action”). City Antiques alleges
seven claims for relief: declaratory relief, breach of contract, breach of the duty of good faith and
fair dealing, breach of fiduciary duty, accounting, negligent misrepresentation, and fraud.
Regarding its claim for declaratory relief, City Antiques requests a judgment interpreting the
terms of the SPCA and its amendments and resolving the dispute between the parties related to
the SPCA, as amended. On May 22, 2014, Planned Furniture filed a motion to dismiss the
lawsuit currently pending before this Court.
DISCUSSION
A. First-to-File Rule
Under the first-to-file rule, the interests of comity, efficiency, and judicial economy give
district courts discretion to “transfer, stay, or dismiss” the more recently filed of two
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substantially similar actions pending in different courts. Cedars-Sinai Med. Ctr. v. Shalala, 125
F.3d 765, 769 (9th Cir. 1997) (citing Kerotest Mfg. Co. v. C-O-Two Fire Equip. Co., 342 U.S.
180, 183-84 (1952), other citations omitted). If a later complaint is filed in a second court
involving the same parties and issues as the first, then the rule “should not be disregarded
lightly.” See Alltrade, 946 F.2d at 625 (quoting Church of Scientology v. U.S. Dep’t of the Army,
611 F.2d 738, 750 (9th Cir. 1979)). The principle behind the rule is to “avoid duplicative
litigation” and “to promote judicial efficiency.” Barapind v. Reno, 225 F.3d 1100, 1109 (9th
Cir. 2000) (citations and quotation marks omitted).
Generally, application of the rule turns on three factors: (1) the chronology of the actions;
(2) the similarity of the parties; and (3) the similarity of the issues. See, e.g., Alltrade, 946 F.2d
at 625. The “rule is not a rigid or inflexible rule to be mechanically applied, but rather is to be
applied with a view to the dictates of sound judicial administration.” Pacesetter Sys., Inc. v.
Medtronic, Inc., 678 F.2d 93, 95 (9th Cir. 1982). Thus, the rule will not apply if a court
determines that equitable interests counsel otherwise; typical exceptions to the rule include “bad
faith, anticipatory suit, and forum shopping.” See Alltrade, 946 F.2d at 628 (citations omitted).
1. Chronology of the Actions
“The first consideration in applying the first-to-file rule is the chronology of the actions.”
Herer v. Ah Ha Publ’g, LLC, 927 F. Supp. 2d 1080, 1088 (D. Or. 2013); Alltrade, 946 F.2d
at 625. On March 5, 2014, Planned Furniture filed the Connecticut Action. City Antiques filed
the Oregon Action almost three weeks later on March 21, 2014. Therefore, the Oregon Action is
the second-filed action. This consideration favors the application of the first-to-file rule.
2. Similarity of the Parties
“The second consideration in applying the first-to-file rule is the similarity of the parties
in the two actions.” Herer, 927 F. Supp. 2d at 1089; Alltrade, 946 F.2d at 625. This requirement
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is “satisfied if some [of] the parties in one matter are also in the other matter, regardless of
whether there are additional unmatched parties in one or both matters.” Intersearch Worldwide,
Ltd. v. Intersearch Grp., Inc., 544 F. Supp. 2d 949, 959 n.6 (N.D. Cal. 2008); see Diversified
Metal Prods., Inc. v. Odom Indus., Inc., 2012 WL 2872772, at *3 (D. Idaho July 12, 2012);
Walker v. Progressive Cas. Ins. Co., 2003 WL 21056704, at *2 (W.D. Wash. May 9, 2003).
Permitting application of the first-to-file rule where there is “substantial overlap” is grounded in
“principles of comity and sound judicial administration.” Cadle Co. v. Whataburger of Alice,
Inc., 174 F.3d 599, 603 (5th Cir. 1999).
City Antiques and Planned Furniture are the only parties in both the first-filed
Connecticut Action and the second-filed Oregon Action. Because the parties are identical, this
consideration favors the application of the first-to-file rule. See Alltrade, 946 F.2d at 625-26
(applying the first-to-file rule where the identity of the parties involved was the same); Global
Experience Specialists, Inc. v. Cunniffe, 2014 WL 3748931, at *5 (D. Nev. July 30, 2014)
(reasoning that because the “parties [were] the same” in two actions, there was a sufficient basis
“to warrant application of the first-to-file rule”).
3. Similarity of the Issues
The third consideration “in applying the first-to-file rule is the similarity of the issues
presented in the two suits.” Herer, 927 F. Supp. 2d at 1089; Alltrade, 946 F.2d at 625. The core
of the dispute in each action relates to the contract claims under the SPCA and related
amendments. Although dismissal under the first-to-file rule does not require the antecedent
finding that the claims in the second-filed action are compulsory counterclaims in the first-filed
action, such a finding bolsters the conclusion that the first-to-file rule is applicable. See
Pacesetter Sys., Inc., 678 F.2d at 94 (discussing the “essentially identical” nature of two pending
actions but not applying Federal Rule of Civil Procedure 13(a) or addressing compulsory
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counterclaims); Colortyme Fin. Servs., Inc. v. Kivalina Corp., 940 F. Supp. 269, 272 n.2 (D.
Haw. 1996) (the “first-to-file rule can operate either independently or in conjunction with
Rule 13(a)”); see also 6 Charles Alan Wright et al., Federal Practice & Procedure § 1418 (3d
ed. 2014) (“Ideally, once a court becomes aware that an action on its docket involves a claim that
should be a compulsory counterclaim in another pending federal suit, it will stay its own
proceedings or will dismiss the claim with leave to plead it in the prior action.” (footnote
omitted)).
The claims asserted by City Antiques in this action “arise out of the transaction or
occurrence that is the subject matter” of Planned Furniture’s complaint in the Connecticut
Action. Cf. Mattel, Inc. v. MGA Entm’t, Inc., 705 F.3d 1108, 1110 (9th Cir. 2013) (explaining
that a counterclaim was not compulsory because it did not rest on the same “aggregate core of
facts” as alleged by the plaintiff). In particular, City Antiques alleges various causes of action
and requests declaratory relief related to the SPCA, amendments to that agreement, and the going
out of business sale that City Antiques alleges that Planned Furniture improperly handled.
Further, and as noted by Planned Furniture, the related nature of the parties’ claims means that
the lawsuits will involve the same witnesses, documents, and testimony. The Court finds that the
claims raised by the parties are “essentially identical” and that this factor supports the application
of the first-to-file rule. See Pacesetter, 678 F.2d at 94 (upholding the district court’s application
of the first-to-file rule where the cases brought by the parties were “essentially identical”).
4. Equitable Considerations
A court may decline to apply the first-to-file rule based on “fairness considerations” or
“equitable concerns.” See Alltrade, 946 F.2d at 628. Specific circumstances under which an
exception to the first-to-file rule will be made include bad faith, anticipatory suit, and forumshopping. Id. City Antiques argues that the Court should decline to apply the first-to-file rule
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based on equitable considerations. City Antiques raises two equitable considerations: first, that
the case is “properly before” this Court based on the parties’ actions in Oregon; and second, that
Planned Furniture filed an anticipatory lawsuit and engaged in forum-shopping.
Regarding whether the District of Oregon is the proper forum, the Court concludes that
because the District of Connecticut is considering this issue in a motion to transfer pursuant to 28
U.S.C. § 1404(a), this Court should not address the issue. As discussed in Alltrade, an argument
regarding the “respective convenience of the two courts . . . ‘should be addressed to the court in
the first-filed action.’” 946 F.2d at 628 (quoting Pacesetter, 678 F.2d at 96). Moreover, any
apprehension that the District of Connecticut may fail appropriately to consider “the convenience
of the parties and the witnesses” is not a matter for this Court’s consideration. Id. (quoting
Pacesetter, 678 F.2d at 96). Thus, any issues regarding convenience or the proper venue for this
dispute should be decided by the District of Connecticut in the first instance.
City Antiques also asserts that Planned Furniture filed an anticipatory suit and engaged in
forum-shopping in filing the Connecticut Action. City Antiques alleges that Planned Furniture
filed suit after extensive negotiations between the parties and the receipt of a settlement letter
sent on February 24, 2014 from City Antiques to Planned Furniture. The type of anticipatory suit
referenced in the Alltrade opinion was a declaratory judgment action. See Alltrade, 946 F.2d
at 628 (citing Mission Ins. Co. v. Puritan Fashions Corp., 706 F.2d 599, 601 (5th Cir. 1983)
(affirming a district court’s application of the first-to-file rule in a declaratory judgment action
where the “Plaintiff caused Defendant to delay filing suit in California by representing that
Plaintiff was considering the merits of [an insurance] claim and by allowing an extension of the
one year limitation period”); see also Factors Etc., Inc. v. Pro Arts, Inc., 579 F.2d 215, 217 (2d
Cir. 1978) (“When the declaratory judgment action has been triggered by a notice letter, this

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equitable consideration may be a factor in the decision to allow the later action to proceed to
judgment in the plaintiffs’ chosen forum.”), abrogated on other grounds by Pirone v.
MacMillan, Inc., 894 F.2d 579 (2d Cir. 1990). Beyond whether the first-filed action requests
declaratory relief, a court may find that a suit is anticipatory where the burden of proof or
applicable law would vary depending on where the suit was filed, which is an aspect of forumshopping. See Mission Ins. Co., 706 F.2d at 602 n.3.
Planned Furniture argues that it did not file a traditional declaratory judgment action and
cites to Adidas America, Inc. v. Herbalife Int’l, Inc., 2010 WL 596584 (D. Or. Feb. 12, 2010), for
the proposition that a declaratory judgment claim is not enough to defeat the first-to-file rule.
The Court agrees. As explained by Judge Mosman, the anticipatory suit exception “does not
apply simply because a party anticipates litigation and sues first to obtain its choice of forum.”
Id. at *2. Instead, it is where a party is denied its “‘traditional choice of forum’ because the other
party lacked a ‘preexisting motive for going to court’ and filed suit based on ‘specific, concrete
indications that a suit . . . was imminent.’” Id. (quoting Inherent.com v. Martindale-Hubbell, 420
F. Supp. 2d 1093, 1097-98 (N.D. Cal. 2006)).
The Court finds that the anticipatory suit exception to the first-to-file rule is inapplicable.
Planned Furniture has an independent basis for its claims against City Antiques, specifically the
damages Planned Furniture alleges it suffered as a result of the alleged breach by City Antiques
of the SPCA and related amendments. Although Planned Furniture’s fourth claim for relief in the
Connecticut Action is for declaratory relief, Planned Furniture also alleges three independent
claims. Further, it is not the case that Planned Furniture induced City Antiques into not filing a
lawsuit sooner by making false promises. See Mission Ins. Co., 706 F.2d at 600 (applying the
first-to-file rule where the plaintiff caused the defendant to delay filing suit by making false

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offers of compromise). Moreover, because the parties agree the contract is governed by Oregon
law, there is no apparent benefit in the applicable law based on litigating the matter in the
District of Connecticut. See id. at 602 n.3 (applying the first-to-file rule because the applicable
law would be governed by the state where the suit was filed). Thus, there was no forum-shopping
and Planned Furniture was entitled to choose a forum it finds convenient.
5. Conclusion
In the interest of comity and judicial efficiency, the Court defers to the earlier filed
Connecticut Action.
B. Remedy
“[W]hen cases involving the same parties and issues have been filed in two different
districts, the second district court has discretion to transfer, to stay, or to dismiss the second case
in the interest of efficiency and judicial economy.” Cedars-Sinai, 125 F.3d at 769. Where a short
statute of limitations is applicable to a party’s claims and “the first-filed action presents a
likelihood of dismissal, the second-filed suit should be stayed, rather than dismissed.” Alltrade,
946 F.2d at 629.
The applicable six-year statute of limitations for an “action upon a contract” under
Oregon law, Or. Rev. Stat. § 12.080, means that there is little risk that City Antiques will be
unable to file another lawsuit in the event the District of Connecticut dismisses the first-filed
action. Therefore, the Court declines jurisdiction in favor of the District of Connecticut and
dismisses City Antique’s complaint without prejudice. See Pacesetter, 678 F.2d at 96 (affirming
a dismissal where neither relevant action proceeded past the pleading stage, there were no bars to
the second-filing parties presentation of its claims, and the first-filed action was capable of
efficiently resolving all issues).

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CONCLUSION
The Court GRANTS Defendant Planned Furniture’s motion to dismiss pursuant to
Rule 12(b)(3) and the first-to-file rule. Dkt. 6. The Court DISMISSES WITHOUT PREJUDICE
City Antiques’ complaint.
IT IS SO ORDERED.
DATED this 12th day of August, 2014.
/s/ Michael H. Simon
Michael H. Simon
United States District Judge

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